Chihuahua adds to Mexican toll ABS

Aug 23, 2013

Issuers are taking advantage of a brighter outlook for Mexican infrastructure

The attention now being paid to Mexico and
its likely growth story has lifted several asset classes and
provided opportunities to issuers. Mexico’s state
of Chihuahua
raised 12 billion pesos ($915 million) this week
through a 25-year ABS, the first part of what could be a 15
billion peso transaction.

Toll road securitizations were already an
important part of the local bond market, and more are set to
arrive. Concesionario de la Autopista Monterrey-Saltillo (CAMS)
is
in the September pipeline.

Infrastructure-focused plays have also been taking advantage of new
interest in equity issuance this year.
Mexico Infrastructure Partners is preparing a certificado
de capital de desarrollo (CCD) fund for Mexican pension
investors, and Cemex is sponsoring a
clean energy CCD fund.

Investors are betting on long-awaited
growth, boosted by a shift in competitiveness and a US
recovery. It is still expected to pick up, through many have
been tapering expectations, especially after a revision this
week of the government’s own forecasts.

Bank of America Merrill Lynch cut this
week its GDP growth forecast for Mexico to 1.5% from 2.5% for
2013 and to 3.5% from 4.0% for 2014. It cites larger than
anticipated effects of the external and fiscal shocks that
affected the economy in the first half of the year as one of
the main factors.

"If GDP grows at a 3.5% annualized pace during
the second half of 2013 (our current expectation), growth would
reach only 1.2% for full-year 2013," Itaú says. "This
evidently makes our current 2.3% growth forecast for this year
(and the 2.7% market expectation) seem very
optimistic."LF

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